Government makes 'improved' NHS pensions offer

Protesters march in London over pensions Unions say two million workers took part in last week's public sector strikes

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The government has announced an "improved" offer on NHS pensions which it hopes will help end part of the wider public sector pensions dispute.

Under the proposals, 530,000 staff earning between £15,000 and £26,557 would be spared any rise in pension contributions next year.

But higher-earning employees would be expected to contribute more.

Doctors' union leaders say it will "intensify" the anger many in the profession already feel.

The move follows last week's public sector strikes which unions say saw up to two million workers walk out in protest at pension plans.

The government wants public sector workers to pay more towards their pension schemes, retire later and accept a pension based on a "career average" salary, rather than the current arrangement in which many public employees' pensions are based on their final salary.

'Protecting staff'

On average, workers face paying an extra 3.2% of their salaries in pension contributions.

Under the initial Treasury offer published in July last year all NHS workers earning under £15,000, equating to about 100,000 staff, were protected from raised pension contributions.

Start Quote

Having listened to staff and stakeholders, we have improved our proposals”

End Quote Andrew Lansley Health Secretary

The revised proposals would see this ceiling raised to £26,557 - affecting an additional 530,000 staff - but only for one year.

This would be paid for by asking staff earning more than this to make higher contributions.

Those earning between £26,558 and £48,982 would be expected to contribute 8% of their monthly salary next year, up from 6.5% now.

This would rise to 8.9% for those on salaries between £48,983 and £69,931 and to 9.9% for those in a pay band of £69,932 to £110,273.

The BBC understands no new money is on the table and unions said the revised offer would penalise middle earners in the NHS such as nurses, health visitors and speech therapists.

'Cold comfort'

Health Secretary Andrew Lansley said the proposed changes would "protect low-paid" staff in the health service.

"Having listened to staff and stakeholders, we have improved our proposals so that an extra 630,000 NHS staff will not pay any more into their pensions next year."

But he warned that the proposals "alone will not be enough to ensure that NHS pensions are affordable in the long term" and further discussions were needed to secure a comprehensive agreement.

Dr Hamish Meldrum, Chairman of Council at the BMA poured scorn on his comments.

"It is inconceivable that the government can claim to have come up with this idea 'having listened to staff'," he said.

"Thousands of doctors and medical students, along with other NHS workers, responded to consultation urging the government against further contribution increases.

"The announcement of an even steeper hike will intensify the anger they are already feeling.

"Doctors contribute up to 8.5% of their pay for their pensions - among the highest in the public sector. That figure could be as high as 14.5% by 2014.

"There is no justification for this, particularly when the final salary pension is to be replaced with a career average scheme."

"The proposed increase in pension contributions will still hit more than half of all NHS staff who are already struggling to cope with the pay freeze and rising inflation," said Christina McAnea, from Unison, which represents more than 1.3 million public sector staff.

"The one year delay before making the lower paid contribute more is cold comfort. Having an increase looming large when the cost of everyday essentials like food and heating is rising so fast is a nightmare for cash-strapped families."

Unite's assistant general secretary Gail Cartmail accused government of trying to circumvent the negotiating process.

She added: "In its haste to sell this as good news, the government is failing to state what it plans for years two or three. They will press on as before so this is a swindle and a short-lived one at that."

Royal College of Nursing Chief Executive & General Secretary, Dr Peter Carter, called the offer "divisive and provocative move" which would mean that more than two thirds of nurses will now face further increased pensions contributions.

"The truth is these increased contributions will not go into the NHS pension scheme, but will go to the Treasury to help pay off deficits that nurses and healthcare assistants have had no part in creating.

"This is nothing more than a tax on nurses, who are already in the middle of a two year pay freeze and then effectively face two more years of pay cuts after that - at a time when inflation is soaring.

"Having to pay an average of an extra £30 a month on top of this is a deeply unwelcome surprise Christmas present from the Government."

Start Quote

This is just a cash grab from public sector workers who will work longer, pay more and get less in return”

End Quote Hywel Williams Plaid Cymru pensions spokesman

The BBC's Industry Correspondent John Moylan said this was a significant new offer but only applied to the NHS - just one of the four major public sector schemes at issue - and did not alter the fundamental terms of the dispute between unions and the government.

MPs are debating the issue of public sector pensions on Thursday with the SNP and Plaid Cymru calling for the government to rethink its "unfair" proposals.

The two parties are using an opposition day debate they have secured in the Commons to argue that negotiations have not been transparent and claim that the government was primarily motivated by a desire to reduce the deficit rather than guarantee the long-term sustainability of pensions.

"This is just a cash grab from public sector workers who will work longer, pay more and get less in return," Plaid Cymru's pensions spokesman Hywel Williams said.

"It was not teachers and civil servants who left the finances in a mess - so why should ordinary people have to clear up the mess?"


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  • rate this

    Comment number 101.

    What is wrong with this Nation? All we do is moan! Let's bring these policy makers to account!

  • rate this

    Comment number 100.

    The Government spin continues - the reality is that working in the NHS is very demanding. Yes, as a senior hospital consultant I admit that I am well paid - I did however study and sit exams for 19 years and now work an 80 hour week (paid for 44hrs only) - Such goodwill is likely to be eroded. Reality check - major cuts, privatisation, disillusioned staff - The NHS is doomed! you have been warned!

  • rate this

    Comment number 99.

    "other than the 14% that your employers ( the taxpayer ) add your contributions? And the fact that its paid out of general taxation, not an investment fund?"

    However, the government also gives tax relief on your payments that you make into a private pension fund (often this is higher than 14%). This has to be made up by taxation and public sector workers pay tax too.

  • rate this

    Comment number 98.

    As a retired person who only ever worked in the private sector and had a maximum gross income of £25k who paid £200 per month pension with zero contribution from any employer and receive £3.7k pension I consider the public sector workers are greedy. Oh, and could the NHS posters please explain to me what a bonus is as I have never received one.

  • rate this

    Comment number 97.

    PFC_Kent You really do spout absolute nonsense. the claw back on private pensions was not on the pension but on the complicated tax avodance that pension managers used to avoid paying tax. The bankers and the City learned pretty fast that to avoid legal taxation reduce the amount invested on behalf of the client. A typical greed attitude so prevalent in the City. please stop reading the Mail.

  • rate this

    Comment number 96.

    Where are Cameron's Behavioural Insight Team on this? Isn't there a well-documented best practice 'nudge' to increase people's pension contributions by deferring an increase until they have their next pay rise (however small that may be). There are common sense ways to achieve public sector pension changes without getting everyone's backs up.

  • rate this

    Comment number 95.

    @57 "NHS & Teachers pension schemes are self funding. They do not require tax payer money to top them up."

    Um, other than the 14% that your employers ( the taxpayer ) add your contributions? And the fact that its paid out of general taxation, not an investment fund?

  • rate this

    Comment number 94.

    "48. nasir
    37. PFC_Kent

    This can be paid for by cutting huge bonuses and huge profits making fairer pension plans for all."

    Errr some actual numbers would probably be helpful here. This fund of 'huge bonuses' and 'huge profits' is a fantasy. Still, as long as union leaders (on 100k+) can point the finger at the rich, all is well. Pots and kettles...

  • rate this

    Comment number 93.

    The only reason the government is attacking public sector pensions is because it is broke and needs the cash, not because the pension scheme is unaffordable - they were renegotiated in 2008. Public or private, this should not be a race to the bottom, we should all stand against the proposed changes.

  • rate this

    Comment number 92.

    @82 Working Stiff
    I think your facts are a little off. Public Sector wage increases will be 1% MAX, not 2% min. The offer to the NHS isn't actually an improvement, it's just spreading the cost differently amongst NHS workers for one year only.

  • rate this

    Comment number 91.

    No one seems to be too concerned about the new auto-enroment that will see virtually all workers in the private sector have to pay 5% of their salary into a DC scheme with a "promise" of unknown penion. Of course, they can always opt out to avoid this "tax". Then again, so can any members of public/private pension schemes if they do not want to/cannot afford to pay the contributions...

  • rate this

    Comment number 90.

    by god/allah the bbc are milking this subject - guess your pensions are under threat?

    its getting boring - you are either a public sector employee (sic) or someone who works in the private sector

    and yes its very much about 'us/them' - your public sector pensions are not affordable - live with it and move on?

  • rate this

    Comment number 89.

    It is blindingly obvious that conventional political parties have failed.
    But that is difficult for conventional chaps to swallow?

    You may recall that by decision of electorate last election was a no-government. But Westminster chaps wouldn't have that. They hurriedly planked over looming black hole by self-appointing unelected government and without mandate to govern, This is situation now!!

  • rate this

    Comment number 88.

    Love watching the greed of everyone - if you are young, just accept you will work `til you fall into your box as the money will have run out long since. Most private funds have said provision under final salary rules are unaffordable - why do state workers think theirs is? Tax to rise to pay for your pensions - you pay tax too don`t you, why poo in your own nest!

  • rate this

    Comment number 87.

    Tell the unions this is it take it or leave it public sector workers who dont like it can resign and find work in the private sector there are millions of vacancies there?

  • rate this

    Comment number 86.

    The only reason the government is attacking public sector pensions is because it is broke and needs the cash, not because the pension scheme is unaffordable - they were renegotiated in 2008. Public or private, this should not be a race to the bottom; we should all stand against the proposed changes.

  • rate this

    Comment number 85.

    I'm sick of hearing that some public sector workers "deserve" more because of they role they do, they chose the jobs they do! In the past if I thought I wasn't getting paid enough I either work harder/moved job or considered the fact that I should of tried harder at school rather than holding the country to ransom to get my own way!

  • rate this

    Comment number 84.

    We don't want a race to the bottom. Just require all employers to offer pensions to their workers on the same terms as public sector schemes. We will soon find out how affordable the public sector pension schemes are.

  • rate this

    Comment number 83.

    2 Minutes ago
    Public sector pensions should be paid for within the wage budget of the department - would require all pub/s pensions to be savings instead of salary based.

    Yep, sounds logical - some public sector schemes are running at a surplus though and if the government handed them over to the department, they wouldn't be able to steal from it as they do now.

  • rate this

    Comment number 82.

    Here we go.

    Yet again we see the Vultures ready to plunge into the workers again !!
    NHS Pensions Improved Offer.
    Benefits increased 5 %.
    Public Sector will get min 2 % increase.

    But what about the Working Stiffs..what for them ?

    I think we know. Riot anyone?


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